Beware the Key Card, Gupta Trial to Show

Most people who work in office buildings think very little about the key cards they stuff into their wallets or hang around their necks on lanyards — except when they come into work or come back from a lunch break.

But they’re likely to play a central role in the insider trading trial of former Goldman Sachs director Rajat Gupta, unfolding in Manhattan federal court this week.

It’s becoming clear that the government got hold of key card records at the Galleon Group hedge fund and plans to use them to corroborate Mr. Gupta’s location during certain conference calls and allegedly illicit trades.

Mr. Gupta is charged with conspiracy and securities fraud for allegedly passing secret stock tips to Galleon founder Raj Rajaratnam, who was convicted in an insider trading trial last year and sentenced to 11 years in prison.

In opening statements Monday, government prosecutor Reed Brodsky talked about key-card records showing that Mr. Gupta entered Galleon’s Manhattan headquarters in March, 2007 and called into a conference call. Shortly after the call, while Mr. Gupta was still in the building, Galleon traded on information the government said came from the conference call via Mr. Gupta.

On Tuesday, Mr. Gupta’s key-card access was the backdrop in a zany turn of events at Galleon offices in 2008. According to text messages between two Galleon secretaries shown in court, Mr. Gupta had been given a key card so he could enter and walk around the offices. Prosecutors spent a significant amount of time Tuesday asking witness Caryn Eisenberg, one of the assistants, about the floorplan of the Galleon headquarters and which parts of the office required a key card to access.

On one occasion, described by Ms. Eisenberg, Mr. Gupta entered the office unannounced. Mr. Rajaratnam, according to Ms. Eisenberg, told her to lie to Mr. Gupta and tell him he wasn’t there. Mr. Gupta was undeterred, she said, using his keycard to move about the office and eventually track down Mr. Rajaratnam.

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The Law Blog covers the legal arena’s hot cases, emerging trends and big personalities. It’s brought to you by lead writer Jacob Gershman with contributions from across The Wall Street Journal’s staff. Jacob comes here after more than half a decade covering the bare-knuckle politics of New York State. His inside-the-room reporting left him steeped in legal and regulatory issues that continue to grab headlines.

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